Role of cost accounting in business management, Cost Accounting

Role of Cost Accounting in Business Management

The system is a set of interdependent parts that together form a unitary whole such performs some functions. A number of sub systems make up the entire. This context of the organization have, a management information system such may be seen like the overall system along with a number of sub systems involving the cost and management accounting system such provide the information to management for reasons of planning,  directing, organizing and controlling the organization's activities so like to achieve corporate goals involving profit maximization.

Information should be collected, communicated and processed in an organized manner whether the objectives of the enterprise are being efficiently implemented and alternative strategies about their implementations examined, so like to decide on the best strategy.

Information may be non-mutually exclusive in nature. Because that information gathered like part of the management information system may be employed in two or more subsystems for differing reasons. An example of this information is along with regard to the location and amount of work in progress: as like work in progress refers to partly finished units of products whereas a product passes via a number of operations and processes before to be passed into finished to the customer or goods store. Work in progress information may be used via:

a) Production planning department in sequence to monitor the progress of parts of an order via the production procedure and to instigate action to speed up the completion of slow moving parts of the order

b) By quality control department in comparing one batch of product along with another in highlighting the incidence of process losses for their location

c)  By cost management department in the quantification and valuation of real loses like compared to the level originally permitted for in the business plan

d) Financial accounting department into the valuation of work in progress for balance sheet reasons and for purposes of find out the cost of sales in the income statement.

Posted Date: 2/5/2013 2:07:10 AM | Location : United States

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